Fundamental Payroll Worker Status and FLSA Flashcards

Which factor is NOT one of the six factors in the DOL's economic reality test for independent contractor status under the FLSA?

Answer: The worker's geographic location

Geographic location is not a factor; the DOL's six factors include control, profit/loss opportunity, investment, permanency, integral nature of work, and skill/initiative.

An employer has workers classified as independent contractors but controls their daily schedules, provides all equipment, and prohibits them from working for competitors. The IRS would likely reclassify them as:

Answer: Common law employees

The IRS common law test looks at behavioral, financial, and type-of-relationship factors; high employer control in all three areas indicates employee status.

Under the FLSA, which of the following is considered 'hours worked' for overtime calculation purposes?

Answer: Time an employee spends waiting on-call at the employer's premises

On-call time at the employer's premises is hours worked because the employee cannot use that time effectively for personal purposes.

A tipped employee's direct cash wage is $2.13/hour. If their tips in a week are insufficient to bring total compensation to the federal minimum wage of $7.25/hour, the employer must:

Answer: Pay a tip credit make-up to reach $7.25/hour

The FLSA tip credit requires the employer to pay the difference if the direct wage plus tips do not equal at least the federal minimum wage.

Which of the following employees would qualify for the FLSA highly compensated employee (HCE) exemption?

Answer: An analyst earning $107,432/year who customarily performs one or more exempt duties

The HCE exemption applies to employees earning at least $107,432 annually who customarily and regularly perform at least one exempt executive, administrative, or professional duty.

What is the FLSA record-keeping requirement for payroll records of non-exempt employees?

Answer: Three years

The FLSA requires employers to retain payroll records, including hours worked and wages paid, for at least three years.

A construction company hires workers through a staffing agency. Under the FLSA, both the staffing agency and the construction company may be held responsible for FLSA compliance. This is known as:

Answer: Joint employment

Joint employment occurs when two or more entities share control over a worker's employment; both can be liable for FLSA violations such as minimum wage or overtime failures.